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Goldman executives to get $111.3m in stock bonuses

Goldman Sachs chief executive Lloyd C. Blankfein will collect about $24.3 million, despite a drop in the firm’s stock. Goldman Sachs chief executive Lloyd C. Blankfein will collect about $24.3 million, despite a drop in the firm’s stock.
By Michael J. Moore and Christine Harper
Bloomberg News / December 16, 2010

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NEW YORK — Goldman Sachs Group Inc.’s chief executive, Lloyd C. Blankfein, and his top deputies will collect about $111.3 million in stock next month in a delayed payoff from last year and their record-setting 2007 bonuses.

Blankfein, 56, is poised to receive about $24.3 million in January, based on yesterday’s share price. President Gary D. Cohn, 50, will get about $24 million, company filings show.

The payouts, just a portion of the $67.9 million bonus awarded to Blankfein for 2007 and the $66.9 million paid to Cohn, reflect a 24 percent decline in the stock’s value since it was granted at $218.86.

Within a year after the bonuses were approved, Goldman Sachs took $10 billion from the US Treasury, converted to a bank, and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs.

This year the firm paid $550 million to settle regulators’ fraud charges related to a mortgage security the company sold in 2007.

“Clearly we now look back and say, ‘Were things fine? Should they have paid? Maybe not,’ ’’ said Jeanne Branthover, a managing director at the recruitment firm Boyden Global Executive Search. “There’s nothing you can do about it. The payouts were in stone. But hopefully, in the future, they won’t be.’’

Since the 2008 credit crisis wiped out competitors such as Lehman Brothers Holdings Inc. and led to unprecedented government assistance to financial institutions, regulators have encouraged banks to pay senior employees with deferred stock and to recoup payouts if trading strategies backfire.

Blankfein and Cohn, who received 2007 cash awards of $27 million and $26.6 million, respectively, did not get any bonuses for 2008 and received only restricted stock for 2009.

The New York-based firm announced on Dec. 10, 2009, that all 30 members of its management committee would receive only restricted stock for their year-end bonuses. The company has not made a similar announcement this year.

Through the first nine months of 2010, Goldman Sachs set aside $13.1 billion to cover compensation and benefits expenses, or enough to pay each of its 35,400 employees $370,706 apiece. That’s down from an average $527,192 per employee a year earlier.

The payments come as bonuses across Wall Street are expected to decline.

Compensation for trading and investment-banking employees is likely to be down 22 percent to 28 percent from last year, according to Options Group, an executive search and compensation consultancy in New York.

Morgan Stanley has told some employees to expect investment-banking bonuses to decline 10 percent to 30 percent, two people briefed on the matter said earlier this month.

Goldman Sachs’s 22 percent share-price decline from the last day of 2007 compares with a 15 percent drop in the Standard & Poor’s 500 index over the same period and a 47 percent plunge in the S&P 500 Financials index.

While the firm’s profit tumbled 80 percent in 2008 from the $11.6 billion earned in 2007, last year the company recovered to post a $13.4 billion record profit. So far this year earnings have been lower.